Employee engagement vs. employee satisfaction: How are they different?

Retention is a high-priority topic in HR today, and the focus of these discussions is often employee engagement. But, employee engagement has a less talked about counterpart—employee satisfaction—which is just as important in driving retention. Neglecting either one of these twin pillars can leave a crack in the door for your top talent to slip through.

Read on to understand the differences between employee engagement and satisfaction, and how to build a strategy that balances both for improved employee retention.

What is employee engagement?

HR Dive shared a study that names connection, meaning, impact, and appreciation as the four pillars of employee engagement. Each of these aspects correlates employee emotions to productivity. Feeling connected to your work and seeing its meaning and immediate impact are key drivers for high engagement. And the icing on the cake is a workplace where hard work is met with high praise and appreciation.

Employee engagement is closely tied to enthusiasm. When your employees feel genuinely excited and positively motivated to work hard, they’re highly engaged. Additionally, when workers are committed to organizational values and strive to live them out, you have successfully engaged employees.

What is employee satisfaction?

Where employee engagement is about being driven by a connection to the work, employee satisfaction is about how closely the job and organization are aligned to an employee's personal career goals and preferred work environment.

Specifically, satisfaction addresses employee happiness and contentedness at work. They might ask, “Is my employer able to fulfill my work needs and desires?”

Though satisfaction can impact retention, it’s more about what a company can do for their employees. How can you understand their unmet needs and find creative ways to solve these employee experience issues?

Employee engagement vs. employee satisfaction: What’s the difference?

The Oregon Primary Care Association explains the distinction this way: “Satisfaction is a ‘one-way street’ (what can you do for me), and engagement is a ‘two-way street’ (what we can do together, in partnership.”

Employees can feel satisfied at your organization while being disengaged. They may love your compensation package and company culture but feel disconnected from the meaning of their work. While a satisfied employee may not be inclined to quit, they might not be producing valuable work for the organization.

The inverse is also true: An employee can feel engaged with their work’s impact but dissatisfied with their compensation or disagree with company values. For example, imagine a healthcare worker who prides themself on providing top-notch care because of an intrinsic sense of medical duty. Yet, this same worker could feel at odds with a company culture that rewards speed over quality. This person may be contributing high-value work to the organization, but their dissatisfaction creates a long-term retention issue.

Why implementing both engagement and satisfaction matters

Thinking about engagement and satisfaction separately may feel like splitting hairs in the grand scheme of work life. However, strategizing for the subtleties of employee experience can yield incredible results. Gallup research found that “teams who score in the top 20% in engagement realize a 41% reduction in absenteeism, and 59% less turnover.” Furthermore, “employees who feel their voice is heard are 4.6 times more likely to feel empowered to perform their best work.”

Accounting for engagement and satisfaction as equal entities can improve how your organization manages employees, meets retention goals, and curbs absenteeism.

How to implement a two-part engagement and satisfaction strategy

Engagement and satisfaction are two sides of the same employee experience coin. While each contributes a unique angle to workers’ day-to-day lives, they require different strategies for implementation.

Part one: Improving employee satisfaction

Starting with employee satisfaction is important for two reasons: It gives you an opportunity to meet your employees’ needs, and it shows your employees you’re committed to their experience at work. If you expect too much at the onset with new engagement policies, employees might be less likely to succeed. Imagine the worker who already feels detached from their job; they won’t go above and beyond as you hope because their basic workplace needs aren’t being met.

Reconsider compensation

The first step toward improved employee satisfaction is reevaluating your compensation package. Send a survey to your employees and ask how satisfied they are with the benefits or options your organization offers. Based on this information, you can offer new benefits during the coming open enrollment period or restructure your options offerings.

Explore internal mobility

Another thing you can gauge in your employee survey is perceived internal career mobility. Do your employees feel like they have a future at your company? This metric will show you how workers feel about their long-term dedication to your organization. If employees feel like there are few options for career development or mobility, they may seek employment elsewhere. In fact, 84% of respondents in our 2023 Pulse of Talent research report said having a clear career path makes them more loyal to their employer.

Ask about challenges

A final item to address in your employee survey is employee experience challenges. Ask employees what they feel is the most prominent gap in your workplace experience, including things like skill development opportunities, company culture, peer collaboration, departmental silos, and hybrid work arrangements.

When administering the survey, you can reiterate that while you won’t be able to adapt to every suggestion, getting a pulse on employee sentiment can increase your awareness and help employees feel heard.

Part two: Securing employee engagement

While employee satisfaction is something you can directly influence with attention and resources, employee engagement partly depends on worker commitment. You can create incentives for people to go above and beyond, but it’s their choice to act on that motivation. As far as the organization is concerned, you can focus on creating an environment conducive to positive engagement, value-driven work, and enthusiastic collaboration.

So, how do you do this?

Align everyone’s goals

Goal setting is crucial to managing employee performance and defining business success. However, the mere act of creating a key performance indicator (KPI) doesn’t mean everyone is one the same page. Aligning goals from the top down establishes a clear message for employees, helping workers understand how their daily tasks relate to their team, department, and broader organization. Employees are engaged when they know their work is making a direct impact.

Create a culture of celebration

Build enthusiasm with a culture of positive celebration. Make employees feel seen and celebrated when they make big sales, reach significant career goals, or achieve success for the company. No matter how small the occasion, making a reason to celebrate can contribute to an overall happier workplace that rewards engagement.

Put values front and center

You could also create more explicitly defined organizational values and repeat them frequently so everyone knows what you stand for as a business. By highlighting the ethical standard of business, employees can sense the purpose and direction behind larger organizational decisions. You can even incorporate these values in your performance reviews, asking employees to reflect and share how their work over past months aligns with the organization’s vision.

Regardless of how you implement these satisfaction and engagement strategies, the mere act of focusing on these items can make a massive difference in the daily lives of your employees and your company as a whole.